Incentivising customers to use its new online ordering service is expected to have wiped almost a third off JJ Food Service's profits.
Sales for the year ending April 2009 were expected to have risen 10% to about £130m. But pre-tax profits were anticipated to have dropped by about £3m from £8.6m in 2008, said MD Mustafa Kiamil.
This was mainly because JJ spent £2.6m funding a 10% discount for online orders between February, when the website was launched, and April.
"I've had to try to change the way our business operates," said MD Mustafa Kiamil. "We've had to spend a lot of time, energy and money on it. No one else has been doing it. We've been leading the way." Pre-tax profit margin for the year would still be above 4%, he added, which is high for wholesale, and he had already convinced more than half his customers to order online and hoped that number could rise to 70% in the next year. Half the customers ordering online are also taking advantage of a further discount to collect their order from one of the five depots.
In the current financial year, JJ would spend a further £3.4m on supporting the online promotion, although the discount was cut to 5% at the start of July. "By the end of the year we will stop offering a discount for ordering online and although it will have cost us millions we will have revolutionised the business, which will save us money in the long term," said Kiamil.
Sales for the year ending April 2009 were expected to have risen 10% to about £130m. But pre-tax profits were anticipated to have dropped by about £3m from £8.6m in 2008, said MD Mustafa Kiamil.
This was mainly because JJ spent £2.6m funding a 10% discount for online orders between February, when the website was launched, and April.
"I've had to try to change the way our business operates," said MD Mustafa Kiamil. "We've had to spend a lot of time, energy and money on it. No one else has been doing it. We've been leading the way." Pre-tax profit margin for the year would still be above 4%, he added, which is high for wholesale, and he had already convinced more than half his customers to order online and hoped that number could rise to 70% in the next year. Half the customers ordering online are also taking advantage of a further discount to collect their order from one of the five depots.
In the current financial year, JJ would spend a further £3.4m on supporting the online promotion, although the discount was cut to 5% at the start of July. "By the end of the year we will stop offering a discount for ordering online and although it will have cost us millions we will have revolutionised the business, which will save us money in the long term," said Kiamil.
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